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Obama’s Benefit-Cuts Budget Takes More from Seniors than from the Wealthy

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By Gaius Publius. Follow him on Twitter @Gaius_Publius. Cross posted from AmericaBlog

Social Security benefit cuts are in Obama’s budget. It’s official. Barack Obama, he of the Hope and the Change, is putting benefit cuts in his next budget proposal, due for release next Wednesday, April 10. (If you were hoping he’d change, he won’t; he’s always been this guy.)

Here are a couple of things to know about this amazing Democratic budget proposal.

The benefit cuts news — the bad and the good

Washington Post (this is the bad news; my emphasis):

Obama budget would cut entitlements in exchange for tax increases

President Obama will release a budget next week that proposes significant cuts to Medicare and Social Security and fewer tax hikes than in the past, a conciliatory approach that he hopes will convince Republicans to sign onto a grand bargain that would curb government borrowing and replace deep spending cuts that took effect March 1.

Obama will break with the tradition of providing a sweeping vision of his ideal spending priorities, untethered from political realities. Instead, the document will incorporate the compromise offer Obama made to House Speaker John A. Boehner (R-Ohio) last December in the discussions over the “fiscal cliff” – which included $1.8 trillion in deficit reduction through spending cuts and tax increases.

And Boehner’s reaction (this is the good news):

The House speaker, John A. Boehner, on Friday waved aside reports that President Obama would seek a new budget compromise next week, accusing the president of again demanding tax increases in exchange for “modest entitlement savings.”

“If the president believes these modest entitlement savings are needed to help shore up these programs, there’s no reason they should be held hostage for more tax hikes,” Mr. Boehner said.

So far, so good. Statement stalemate.

The plan — how Obama wins
According to Sam Seder on the Majority Report (start listening at 24:45 in the clip), the path for Obama’s latest Grand Bargain is through the Senate using budget reconciliation, which takes the filibuster off the table. Then it goes to the House, where only a small number of Republicans are needed to pass if most Democrats vote for it.

This is Obama’s best shot this round. Get Reid to get it through the Senate (assuming he wants to) with 51 votes. Get 50 Republicans (out of more than 200) to pass it along with a majority of Dems (out of exactly 200). Needed to pass: 218 votes. I hear the motors starting — tickets on Dennis Kucinich’s Plane Ride will be available soon.

You know what to do. Senate phone numbers here. House phone numbers here. Tell them they will lose their jobs if they vote against Social Security and Medicare. Tell them Obama will get Clinton money for life while they’re scuffing K Street carpet and cashing think-shop checks. Bad trade for them.

Everyone in the House is up every two years. These are the Senate Democrats up for re-election in 2014:

Senate Democratic class of 2014

Last Name First Name State Party Phone Class
Baucus Max MT D (202) 224-2651 2
Begich Mark AK D (202) 224-3004 2
Coons Chris DE D (202) 224-5042 2
Durbin Richard IL D (202) 224-2152 2
Franken Al MN D (202) 224-5641 2
Hagan Kay NC D (202) 224-6342 2
Harkin Tom IA D (202) 224-3254 2
Johnson Tim SD D (202) 224-5842 2
Landrieu Mary LA D (202) 224-5824 2
Lautenberg Frank NJ D (202) 224-3224 2
Levin Carl MI D (202) 224-6221 2
Merkley Jeff OR D (202) 224-3753 2
Pryor Mark AR D (202) 224-2353 2
Reed Jack RI D (202) 224-4642 2
Rockefeller John WV D (202) 224-6472 2
Shaheen Jeanne NH D (202) 224-2841 2
Udall Tom NM D (202) 224-6621 2
Udall Mark CO D (202) 224-5941 2
Warner Mark VA D (202) 224-2023 2

The Senate class of 2016 should be looking over its shoulder as well, as should any 2014 Republican facing a tight race (I haven’t checked to see who’s vulnerable, if anyone).

The Rich vs the Rest — Obama edition

This is the Democratic Party and its neoliberal owners playing their version of the Rich vs. the Rest. How does that apply to Obama’s budget proposal? Credit Dean Baker with the telling detail (my emphasis):

Social Security is about 70 percent of the income of a typical retiree. Since President Obama’s proposal would lead to a 3 percent cut in Social Security benefits, it would reduce the income of the typical retiree by more than 2.0 percent, more than three times the size of the hit from the tax increase to the wealthy.

And he offers a nice chart:

btp-chained-cpi-obama

The taller the bar, the bigger the hit. The first bar is the Social Security hit to seniors. The second is the tax hit to a $500,000/year family. Obama’s priorities in one handy graph.

Need more? Yves Smith at Naked Capitalism (my emphasis and some reparagraphing):

Now It’s Official: Obama Sells Catfood Futures, Um, Social Security and Medicare Cuts

There is no more pretense possible. As we’ve warned for some time, Obama is eager to put a notch on his belt by being the President that rolled back the New Deal programs that helped create broad-based middle-class prosperity and dignity.

He’s cast himself as an adult inflicting discipline on profligate Americans. But in reality, the profligacy was most concentrated among elite financiers who used leverage on leverage vehicles to stoke liquidity that led to worldwide underpricing of risk. They paid themselves record bonuses in the years immediately preceding the crisis, and then in a grotesque display of ingratitude, did so again in 2009, able to do so only thanks to massive taxpayer support, alphabet-soup special borrowing programs, and the tax on savers known as ZIRP.

And the direct result of their looting exercise that produced the crisis was the explosion in government deficits, due to a collapse in tax revenues and a rise in payments under countercyclical programs such as unemployment insurance and food stamps.

That’s smart-person-speak for:

Obama gave it to the bankers and he’s taking it back from you.

This will kill people. Dave Johnson, who writes at Campaign for America’s Future, notes via email (also here; emphasis added):

The Obama budget is going to offer “Grand Bargain” cuts in Social Security and Medicare, hoping to get Republicans to offer tax increases.

We are heading into a retirement crisis. The 401K experiment didn’t work. Companies have pulled back on pensions. And the squeeze that has been on regular people for decades means that people also do not have the savings they need to get them through old age.

And all the money went to the top. The last thing the country needs is cuts in essential services for the elderly.

I disagree with the framing; Obama’s doing it because he wants to, all on the merits. But everything else Johnson says is right. When we need it the most, he’s taking it away.

I’ll say again, this will kill people.

Even Class War Kitteh agrees

Class War Kitteh is one of my favorite furry friends. Class War Kitteh takes no prisoners. And “someone” just made Class War Kitteh’s enemies list.

ClassWarKitteh_catfood

Class War Kitteh sez:

“If seniors shop the catfood aisle, what aisle can I shop?”

Indeed.

Your bottom line

This feels like one of the big ones. He’s as nakedly anti–Hope & Change as he’s ever been. (Let me clarify; he’s always been anti–Hope & Change on economic issues; he’s never been this naked about it.)

Obama seems absolutely determined to sort Democrats and progressives into Neolib Enablers and Neolib Enemies, with nothing in between. Let’s see how that goes. It could be a plan that works for him, or not. Either way, there will a lot fewer mugs on one side of the progressive fence, and equally fewer wumps on the other side, when all this shakes out.

And that may not be bad.

GP

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

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38 comments

  1. David

    Yes, the politicians will have to jump one way or the other and so we will know which are our friends.

    1. OpenThePodBayDoorHAL

      Is there anyone remaining who considers themselves somewhere to the left of Attila The Hun who is not utterly and completely disgusted by this Black Bush in the White House? Obomba is the biggest political betrayal and bait-and-switch in the modern era: never has there been such a yawning gap between the words and the actions. With Tricky Dick at least you knew perfectly well what you were getting. We knew Jimmy Carter was an incompetent manager but had his heart in the right place. It was plainly obvious what we were getting with the two Bushes. Clinton was slippery but at least only moved from Left to Center. The current Imposter-in-Chief has gone from Left to Far Right. Disgusting.
      I knew the fix was in when he got elected. Yeah, uh-huh, a young inexperienced black guy is gonna be allowed to get in and change everything bad about the Bush years. Uh-huh.

  2. psychohistorian

    If we capped inheritance the public commons would have plenty of money for the promised safety net of SS and gain control back of our country.

    1. psychohistorian

      The later by neutering the uber-rich that have bought our current government.

  3. kimsarah

    Excellent idea. This is what we should be doing on every important issue. Keeping a widely exposed scorecard of where every senator and congressman stands (by their votes, not their empty rhetoric).
    Although I don’t believe flooding their offices with phone calls or letters accomplishes much, it is still worth doing if time allows. An even bigger effect is public embarrassment by constantly flooding the internet with their names and votes. Bloomberg has shown that through TV commercials, pro-NRA politicians can be damaged. That is the expensive way to go. The cheaper way is to do this:

    Sen. Kay Hagan, D-NC: Fracking (YES); Gun control (NO); Audit of the Fed (NO); Corporate tax repatriation (YES); Stricter banking regulations (NO); More funding for wars and spending on war contractors (YES); etc…

  4. Shirley

    How funny…reconciliation will be just fine to cut social security, thank you, but was somehow off the table for the public option.

    This isn’t democracy. (And in other news, the sky is still blue.)

    1. Lambert Strether Post author

      Of all the bad things “progressives” did in the battle to suppress single payer, bail out the insurance companies, and pass ObamaCare, surely the worst was to introduce the shape-shifting “public option,” which we were expected to treat seriously, even though it was never more than a slogan. (See Kip Sullivan here and here.) And yet people still seem to yearn for it. I can’t understand this.

      Of course, in retirement, privatizers would love to treat Social Security as a “public option,” an irony lost on the “progressives.”

  6. Paul W

    You couldn’t provide 1-800 numbers?

    Phoning a politician is great cover for ones conscience. It’s also a waste of a dime, sorry quarter, or is it fifty cents now? It will eventually be a dollar so I’ll let you keynesians keep track.

    1. afisher

      Try using this magical device on which you typed your complaint – do I really need to provide a link to each officials email?

      1. ambrit

        Dear afisher;
        Re: “do I really need to provide a link to each officials e-mail?” With this bunch, probably not. With the “great unwashed” you really do. Most people are so ‘short attention spanned’ today, easy linking is the way to go. Yes, it’s a hemorrhoid producing process. Sorry.

  7. clarence swinney

    CLINTON TO BUSH TO OBAMA
    Who Dug the Deep Hole? Who Fumbled the ball?
    Numbers rounded

    Clinton left Bush an 1800B Budget
    Bush Left Obama a 3500 Budget

    Clinton left Bush a 240B Surplus as far as the eye can see
    Bush left Obama a 1400B Deficit as far as the eye can see

    Clinton left Bush 5,700B of Debt
    Bush left Obama 11,800B of Debt

    Clinton left Bush a 237,000 net new jobs created per month
    Bush left Obama a 31,000 lowest number since Hoover.

    Clinton left Bush 17 Million Manufacturing Jobs
    Bush left Obama 11 Million Manufacturing Jobs

    Clinton left Bush a 10,800 Dow
    Bush left Obama an 8028 Dow

    Clinton left Bush Peace on Earth Good Will From Most Men
    Bush left Obama Hell on Earth Two disastrous wars. Enmity of 1500 Million Muslims

    Clinton left Bush a President most highly rated of any peacetime President in Asia, Africa, Europe.
    Bush left Obama the most hated President in history
    Bush left Obama an Housing Tsunami and Financial Volcano
    Bush left Obama, in 2008, an 8500B Bail out commitment Yes! 8500 not just 700
    Bush left Obama his Takeover of Fannie/Freddie, AIG, and first bailout of Chrysler
    Bush increased maximum loan by Fannie/Freddie from $153,000 in 2000 to $300,000 then to $729,000
    That is how F&F got stuck with so many toxic mortgages. Bush gift to Big Bank pals.
    Bush increased FDIC maximum deposit coverage from $100,000 to $250,000. Help the rich.
     

    1. from Mexico

      You know we’re now 5 years into Obama’s administration, and the blame Bush for eveything routine is getting a little bit tired and dated by now.

      Obama kept Bernanke.

      Obama kept Gates.

      Obama kept Geithner.

      Is this “change you can believe in”?

      1. JGordon

        Yeah, Obama is Goerge W. Bush in a latex mask. Actually Obama is more like W’s evil twin brother in a mask, since it seems like Obama’s activities in office are even more vile and egregious than W’s were.

      2. Wat Tyler

        Blaming the Bush administration will never get old because the past is fixed. Check back in 100 years and historians will still be saying that Cheney was evil.

        Jim

        1. jrs

          I hope in 100 years teh slower learners, even the slow learning historians, will finally have caught up enough to say the same about Obama.

    2. JGordon

      It’s funny that you bring up the Clinton “surplus”, since it was achieved with accounting gimmickry by raiding Social Security:

      http://www.factcheck.org/2008/02/the-budget-and-deficit-under-clinton/

      In other words, your precious “surplus” under Clinton is at least a contributing factor to why our elderly will be eating catfood soon. Way to go “liberals”.

      By the way, what are the policy differences between W. Bush and Obama? If you have integrety and intellectual honesty just go ahead and say “there is almost no policy difference on any issue between Obama and Bush”.

    3. rps

      “Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions, begun at a distinguished period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing [a people] to slavery” Thomas Jefferson. Rights of British America, 1774 ME 1:193, Papers 1:125

  8. docG

    Obama’s critics are falling into the same trap he’s fallen into: making way too much of tiddly wink issues while the really serious shortcomings of our “social safety nets” go unexamined and unaddressed. As one of those seniors whose S.S. constitutes a large chunk of his total income, I can attest that 1. S.S. is currently a totally inadequate pittance compared to what is needed; 2. over the last several years those much debated annual “cost of living” increases have amounted to diddley squat, literally a joke — NOT worth arguing about, much less fighting for.

    Sure, for whatever reason, whether you want to see him as a Machiavellian manipulator or hapless dupe, Obama has dropped the ball. But so have his so-called “leftist” critics, eager to vilify him over so silly an issue as bushwha “cost of living” increases already fine tuned for minimal impact.

    What is needed is a complete overhaul of both Social Security and our taxation system, to reflect the inordinate impact of inequality on our econcomy, our way of life and our Democracy. The cure for the S.S. “crisis” is to replace the highly regressive system through which it is taxed with a truly progressive system, based on a progressively graduated percentage of ALL income, not only payroll income, based on ALL levels of income, not only the first $100,000 or so. A reform of such magnitude would enable the USA to provide adequate retirement income to all who need it — the lack of which is in fact the true crisis, NOT lack of money, because the money is there — in abundance — it just needs to be tapped.

    1. ohmyheck

      Wow, you really have drunk the Obama Kool-Aid. Anybody with a lick of reason and logic knows the answer is simple— raise the cap. Period.

      That is all that needs to be done to “fix” SS.

      But you have bought into Obama’s BS rhetoric, because you just cannot admit that you are wrong about Obama. There is nothing anyone here can do to get you over your authoritarian mindset.

      I would say you are “Party Over Policy”, but it is even worse. You are “Personality Over Policy.”

      You are wasting your time here, where it could be better spent at your Obama Fan Club websites, because from I can tell, those rats are jumping ship by the busload.

      1. docG

        Excuse me, but where in my comment did you see anything remotely supportive of Obama’s feeble attempts at yet another pointless “compromise”? Read me again, or better yet learn to read in the first place. My problem with those attacking Obama is not that Obama is right, but that the issues involved are so trivial they’re not worth arguing over, but only a drain on the energy of the left. As a recipient of S.S. I care not a whit about the phoney “cost of living” increments. Whether they go up or down won’t matter much at all to anyone. What I DO care about is the willingness of so many on the left, including Obama (and especially Obama) to drink the real “Kool-Aid,” i.e., the colossal misdirection on which so much of our energy is being spent. While so many debate trivial issues such as this, the Oligarchs are being given a pass to continue running this country into the ground.

        And yes, of course, raising the limit, or better eliminating it, is certainly a far better way to solve this so-called “crisis” than anything being proposed now by anyone in Washington, on the right OR left.

    2. jrs

      I dont’ think you understand the impact of chained CPI. Ok well most people dont’ understand compound interest either. It’s not just that the COLAs will go away, it’s pretty soon the payments will not even kinda keep up with the cost of living. Cost of base survival.

      Raising the CAP might make social security more unpopular though as part of it’s popularity is people thinking they’ve paid for it. Then again if they are going to destroy it anyway, it’s better than many alternatives mostly the chained CPI!

    3. jrs

      Whether SS is a pittance depends. If you were fairly high earning (and thus put in a lot over the years), managed to pay off a house and have small other income coming in (and this doesn’t have to be much), it’s ok, it’s not making anyone rich, but not bad especially as Medicare covers much of the health expenses. That’s at present …

  10. rps

    For 2013, 99% of Americans will pay into Social Security on incomes below $113,700. In other words, 99% of US citizens see SS taken out of every single paycheck. However, the privileged 1% do not pay SS on income they earn above $113, 700. My point —simply remove the Cap

    Why does Obama choose to undermine the stability of our social safety nets that protect the elderly, children, disabled and disenfranchised from destitution and starvation?

    Why does Obama claim to love America but hates Americans?

    1. NotTimothyGeithner

      He’s a prick who isn’t particularly bright because Obama has pretty much decided to drive his Presidency off the cliff.

      We could go on and conclude that Obama has weird daddy issues which deal abandonment and a desire for an idealized, stern father figure like the other kids in Kansas had instead of a womanizing asshole for a father and some free spirit who dragged him around for a while. “Dreams of my Father” was a weird book, and there was a passage where he meets a brother of his. Obama’s reaction is basically disappointment because his brother didn’t live up to his expectations which is pretty high and mighty for a drug user. I would say Obama is living out a creepy Cosby”Father knows best” fantasy on the whole country.

  11. Brooklin Bridge

    “You know what to do. Senate phone numbers here. House phone numbers here. Tell them they will lose their jobs if they vote against Social Security and Medicare. Tell them Obama will get Clinton money for life while they’re scuffing K Street carpet and cashing think-shop checks. Bad trade for them.”

    This has to be done, I’ll do it, but the news is really bad because now that we desperately need leverage of some kind, any kind, telling Democrats we won’t vote for them is a very very weak option. It’s like shouting “Wolfe” again and again when it doesn’t mean anything and expecting people will come running each and every time. They won’t. It’s like pissing into a hurricane and expecting to stay dry. Won’t happen. It is a TERRIBLY weak option and it is weak, such thin gruel, entirely thanks to the lessor of evil tribalism Democrats who have consistently sent a clear signal to Democratic politicians that no matter what they do, no matter what, NO-MATTER-WHAT, even killing American citizens on US soil with no judicial review, they will be elected again and again (as long as they have their counterparts make a few pathetic noises and scary gestures). So NOW we are telling them we won’t vote for them? Ha, Ha, Ha, Ha, Ha, Ha, Ha, Ha, Ha, Ha, SNORT!

    The news is also bad because of a second line of argument used by the same people when they notice the first one isn’t working as well as it used to. It’s the shame argument, the “be an adult” line: ” Use the system. Handle things over time, responsibly, in primaries”. More, Better, Dems. Yea, right. That might work about 30 years after we go extinct.

    Hell, even in my enlightened state of Massachusetts, where Kerry is wiping sweat off his brow that he got out in the nick of time – before having to face an actual vote, Elizabeth Warren doesn’t even bother to have a human answer her phone in Boston and the recording, assuming someone bothers to listen to it, does NOT get back to you (by the way, there is no breed of US Senator that only handles finance matters. Once they are elected they are supposed to be like all the other senators, they Represent You – snicker on EVERYTHING). At least she’s honest. She’ll get back to you in your dreams. If anyone actually answers her line in DC, she’s either figuring out where they call from, or she simply doesn’t care. We’ll see. I hope she makes more than noises and does more than simply embarrassing a few CEO’s or minor administrative types. But I have a nasty suspicion that Warren will not be doing any actual filibuster, or making any moves what-so-ever beyond a little noise – and maybe not even that – to prevent this death-blow to seniors (and the Democratic party) from going through.

    But what the hell, I’ll call her again: Wooooooolf, Wooooooolf, Wooooooolf…

    1. jrs

      “entirely thanks to the lessor of evil tribalism Democrats who have consistently sent a clear signal to Democratic politicians that no matter what they do, no matter what, NO-MATTER-WHAT, even killing American citizens on US soil with no judicial review, they will be elected again and again”

      Yea really if you vote for people who claim the right to KILL YOU DIRECTLY by straing out murdering you with a drone someday, why be shocked if they plan to kill you indirectly, by starving you in your old age?

  12. bruceKrasting

    I don’t think that the change in CPI will happen. That said, the consequences of changes to COLA should be reported with the full results.

    The change in COLA does not impact just benefit payments. It changes taxable income. The change to Chained CPI will cause “bracket creep” at faster levels. So the change in COLA is also a tax increase.

    The CBO did a report: http://www.cbo.gov/publication/43965

    The results:

    2014-2023 reduction in SS benefits = $127.2B
    2014-2023 increase in Federal Tax receipts = 123.7B

    For every dollar of cuts there is a dollar of tax increase.

    It’s okay to hate the proposed COLA increase, but it should be painted with the proper brush.

    1. Jim

      Bruce: Thanks for this CBO link. I had not realized that the Chained CPI would be used so extensively.
      Presumably, the change would gradually reduce initial Social Security benefits for future retirements, due to the way that prior earnings are weighted..
      Am still wondering whether it would apply to TIPS inflation adjustments, since there has been no reaction from the bond market.

  13. A. Wells

    There is a new declaration of independence in effect, that of the One Percent and their lackeys, including all the branches of the government at all levels. It starts with F**k the People! We should be pragmatic, and make it official.

  14. Chris-Engel

    Corrine Brown has been a protector of SS, but her office was the only óne that answered of my representatives, let the poor kid who answered have it, but he said he couldn’t speak for any of her positions, only take comments. I told him if she supports Chained CPI she’s not getting my vote. Seemed like he was writing it down as I explained why it was a cut and not acceptable.

    Others I left messages on machines (Bill Nelson’s is a pain).

    RootAction you can have an automated message send your three representatives (sorry DC!) digitally too to oppose Chained CPI:

    http://act.rootsaction.org/p/dia/action/public/?action_KEY=7703

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